NZ finance jargon, in plain English.

Rates & the OCR

OCR (Official Cash Rate)

The wholesale interest rate set by the Reserve Bank of New Zealand for overnight lending. Seven decisions per calendar year on a pre-announced schedule. Floating mortgage rates move with the OCR almost immediately; fixed mortgage rates are influenced through swap rates.

What this means for you: when RBNZ moves the OCR, your floating rate moves within 48 hours. Your fixed rate may have already moved before the announcement, because the swap market priced the move in. See Swap rates explained.

Swap rate

The wholesale interest rate banks use to hedge fixed-term lending in the market. Quoted at 1, 2, 3 and 5-year terms. Fixed mortgage rates are typically the swap rate plus a margin of 1.5% to 2.5%.

What this means for you: if you want to predict where 2-year fixed rates are going, watch the 2-year swap rate, not the OCR commentary. Swap rates move daily; OCR moves seven times a year.

Basis points (bp)

One basis point equals 0.01%. Used in interest rate commentary to avoid confusion between absolute percentage changes and proportional ones. A move from 5.50% to 5.75% is "25 basis points" or "25bp".

What this means for you: 25bp on a $700,000 mortgage is roughly $1,750 of interest per year. Small-looking numbers compound to large dollar amounts.

Floating rate

A mortgage interest rate that moves with the bank's variable rate, typically pegged to the OCR plus a margin of around 3%. No fixed term, no break costs, repayable at any time without penalty.

What this means for you: highest cost per month, but maximum flexibility. Useful for short-term funding or for buyers expecting a lump-sum repayment soon.

Mortgages & borrowing capacity

LVR (Loan-to-Value Ratio)

Loan amount divided by property value, as a percentage. An 80% LVR means borrowing 80% of the property's value. Banks price loans differently in different LVR bands, with high-LVR loans attracting a Low Equity Margin.

What this means for you: getting below 80% LVR (through deposit, principal payments or property growth) usually unlocks a sharper interest rate. The break points are 80% and 90%.

DTI (Debt-to-Income ratio)

Total household borrowing divided by gross household income. From 2024, RBNZ caps new owner-occupier lending at six times income, and investor lending at seven times. Banks have flexibility for a portion of their book to exceed these caps.

What this means for you: on higher incomes, DTI rather than servicing may now be the binding constraint on how much you can borrow. See How much can I really borrow in NZ?.

LEM (Low Equity Margin)

An additional interest rate margin (0.4% to 1.5%) applied by banks to loans with LVR above 80%. The margin compensates the bank for the higher risk of high-LVR lending. Often removed once the LVR drops below 80% through repayments or property growth.

What this means for you: if you're paying an LEM, ask the bank to review it when your LVR drops below 80%. The removal isn't always automatic.

LMI (Lender's Mortgage Insurance)

An insurance premium paid by the borrower (or added to the loan) on some high-LVR loans, including the Kāinga Ora First Home Loan. Protects the lender if the borrower defaults. Roughly 1% of the loan amount.

What this means for you: on the First Home Loan, the LMI premium replaces the LEM. Usually a better deal over time because LMI is a one-off and LEM is ongoing.

CCCFA (Credit Contracts and Consumer Finance Act)

The main NZ consumer credit law, which sets disclosure requirements for lenders and requires lenders to lend responsibly under the Responsible Lending Code. The 2021 amendments tightened affordability assessment requirements.

What this means for you: the CCCFA is why banks ask for so much detail on your living expenses. The detail is regulator-mandated, not optional.

UCCC (Uniform living-cost figures)

Industry-standard living-cost figures banks use to assess affordability. Based on household size, location and dependents. May be higher than your actual living costs, and applies regardless of what you actually spend.

What this means for you: "I only spend $2,500 a month" doesn't get you anywhere with the bank if the UCCC figure for your household is $4,500. You can argue specific items; you can't avoid the baseline.

Servicing test rate

The stressed interest rate banks use to test whether you can afford the loan. Typically 2-3 percentage points above the carded rate, around 9% in 2026. Set by each bank individually and moves monthly.

What this means for you: the servicing test rate is the single biggest lever in borrowing capacity. A 1% change moves capacity by 8-10%.

Revolving credit

A flexible mortgage facility that operates like a giant overdraft against your home. Balance fluctuates with deposits and withdrawals. Interest charged only on the daily outstanding balance.

What this means for you: useful for households with income/expense mismatches or for parking lump sums offset against the mortgage. Requires discipline; it's easy to misuse.

Offset account

A savings account linked to the mortgage where the balance reduces the interest charged. The balance is not paid off the mortgage but functions as if it were for interest calculation. Money remains available for everyday use.

What this means for you: if you have $50k of cash sitting earning 3% in a savings account while your mortgage charges 6%, an offset arrangement effectively earns you 6% on that $50k.

Cross-collateralisation

When the same security (typically a property) secures multiple loans, often across multiple properties or purposes. Common in NZ banking but can complicate refinancing and equity release.

What this means for you: avoiding cross-collateralisation usually keeps each loan's structure clean and separable. Particularly important for investors.

First home & deposit

FHL (First Home Loan, Kāinga Ora)

A government-underwritten scheme that lets eligible first-home buyers borrow up to 95% of purchase price at the same interest rate as a 20%-deposit buyer. Replaces the older 'KiwiSaver HomeStart' product. Has income caps and regional house-price caps.

What this means for you: if you qualify, the FHL is usually mathematically better than a standard high-LVR loan because the LMI premium is one-off and the LEM is ongoing. See FHL explained.

First Home Withdrawal (KiwiSaver)

The mechanism by which a KiwiSaver member who has been a member for at least three years can withdraw most of their balance to buy a first home. Funds are paid to your solicitor on settlement, not to you.

What this means for you: tell the bank about the withdrawal upfront, as deposit. Don't bury it. See First Home Withdrawal mistakes.

KiwiSaver & retirement

KiwiSaver

A NZ retirement savings scheme launched in 2007. Members contribute 3%, 4%, 6%, 8% or 10% of gross income and employers match at a minimum 3% (subject to age conditions). Government adds a Member Tax Credit of up to $521.43 per year.

What this means for you: KiwiSaver is the single most powerful long-term saving tool for most NZers, because of the combined employer and Government contributions.

Employer contribution (compulsory)

The minimum 3% of gross salary that employers must pay into KiwiSaver for eligible employees. Compulsory from age 18 to 65. Optional past 65. Some employers contribute above 3% as a benefit.

What this means for you: if you're not contributing to KiwiSaver, you're foregoing your employer's 3%. That's a 3% pay cut you've volunteered for.

MTC (Member Tax Credit)

The Government's annual contribution to KiwiSaver members under 65. $0.50 per $1 of your own contributions, capped at $521.43 per year. You need to contribute $1,042.86 of your own money to capture the full $521.43. Stops at age 65.

What this means for you: if you're self-employed or part-time, voluntary contributions of $1,043 per KiwiSaver year (July to June) capture the full credit. It's the highest-return investment available to most NZers.

PIR (Prescribed Investor Rate)

The tax rate applied to investment returns inside KiwiSaver and other PIE funds. Set at 10.5%, 17.5% or 28% based on your income. Lower than most marginal tax rates, which is why PIE funds (including KiwiSaver) are tax-advantaged.

What this means for you: check your PIR with IRD or through MyIR. Wrong PIR (too high) means overpaying tax inside the fund; wrong PIR (too low) means a tax bill at end of year.

PIE (Portfolio Investment Entity)

A NZ tax structure for funds that taxes investment returns at the investor's PIR rather than the fund's company rate. KiwiSaver is structured as a PIE. Many managed funds and term-deposit substitutes are also PIEs.

What this means for you: for higher earners, PIE-structured investments are taxed at the 28% PIR cap rather than the 33% or 39% marginal rate, which is a meaningful tax saving over time.

Fund switch

Moving your KiwiSaver balance from one investment fund to another (e.g. Conservative to Growth). Free, no tax triggered, no penalty. Most providers allow online switching.

What this means for you: see Why most NZers are in the wrong KiwiSaver fund. Switching is the single highest-leverage thing you can do in KiwiSaver and most people never do it.

NZ Super

Universal state pension paid from age 65 to NZ residents (after meeting residency requirements). Paid fortnightly by Work and Income. Adjusted with inflation. Not means-tested; not dependent on retirement; not dependent on KiwiSaver balance.

What this means for you: NZ Super is the floor. KiwiSaver is what you draw down on top of Super to fund the lifestyle you want.

Insurance & cover

ACC (Accident Compensation Corporation)

NZ's universal, no-fault accident insurance scheme. Covers treatment costs and weekly compensation (80% of pre-injury earnings) for accident-related injuries. Does not cover illness, cancer, mental health absence, or chronic conditions.

What this means for you: ACC is good. It is not enough. See ACC vs income protection.

Income protection insurance

A private insurance policy that pays a percentage (typically 75%) of your pre-disability income if you become medically unable to work, for a defined benefit period (commonly 2 years, 5 years, or to age 65).

What this means for you: covers the gap ACC doesn't, which is most things. Worth considering particularly for sole earners, self-employed, and tradespeople.

Pharmac

The NZ Government agency that decides which medicines are funded by the public health system. Funded medicines are free or low-cost. Non-Pharmac medicines (including many newer cancer therapies) must be self-paid or covered by private health insurance.

What this means for you: the "non-Pharmac drug benefit" on a private health policy is the line item most people don't think about, and the most valuable one if it's ever needed.

Tax & property

Bright-line test

A NZ tax rule that treats gains on sale of residential property within a defined window as taxable income. From 1 July 2024 the window is two years for most residential property, down from ten years previously.

What this means for you: for investors planning short holds, the gain is taxable. For longer holds (over 2 years from acquisition), Bright-line doesn't apply. See Bright-line for property investors.

IRD (Inland Revenue Department)

The NZ tax authority. Administers personal and corporate income tax, GST, KiwiSaver, Working for Families, child support, and student loans. Online portal MyIR is the primary interface for personal tax administration.

What this means for you: log into MyIR at least once a year. It's where you check your PIR, your KiwiSaver, your Working for Families entitlement, and your tax position.

Working for Families

A NZ tax credit system for working families with dependent children. Includes Family Tax Credit, In-Work Tax Credit, Minimum Family Tax Credit and Best Start. Administered by IRD. Eligibility and amounts depend on family income and number of children.

What this means for you: a meaningful number of working families with children are entitled to Working for Families but don't claim it because the system isn't intuitive. Worth a 30-minute check with an accountant.

Regulators & advice

RBNZ (Reserve Bank of New Zealand)

NZ's central bank. Sets the Official Cash Rate, regulates the banking system, manages the money supply, and oversees financial stability. Publishes a Monetary Policy Statement that informs the OCR decision schedule.

What this means for you: the OCR calendar is published in advance. We watch it; you don't have to, but if you're ever curious, it's at rbnz.govt.nz.

FMA (Financial Markets Authority)

The NZ regulator of financial markets, financial advisers and financial product issuers. Oversees the FAP licensing regime and enforces conduct standards for financial advice and financial product disclosure.

What this means for you: if you have a serious concern about a financial adviser's conduct, the FMA is the regulator. For day-to-day disputes, FDRS is usually the first step.

FAP (Financial Advice Provider)

A licensed entity under the Financial Markets Conduct Act that is permitted to give regulated financial advice in NZ. Wealth Health Limited holds FAP licence FSP 523606. All NZ financial advisers either hold or work under a FAP licence.

What this means for you: always check the FAP licence of any adviser before engaging. The FAP system replaced the older AFA/RFA regime in 2023.

FSP (Financial Service Provider)

Any entity registered on the Financial Service Providers Register to provide financial services in NZ. Different from FAP licence; the FSP register is the broader provider register. Each adviser also has an individual FSP number; Craig Coupland's is FSP 105424.

What this means for you: the FSP number is the adviser's professional ID. Public-searchable at fsp-register.companiesoffice.govt.nz.

FSPR (Financial Service Providers Register)

The public register of NZ financial service providers maintained by the Companies Office. Holds the FAP licence and FSP individual adviser records. Public-facing and searchable.

What this means for you: look up your adviser before engaging. The register confirms their licence status and disciplinary history.

FDRS (Financial Dispute Resolution Service)

One of four government-approved external dispute resolution schemes for financial service providers in NZ. Every FAP must belong to a scheme. Clients with unresolved complaints can take them to the scheme for an independent determination.

What this means for you: if you have a complaint about a financial adviser and the firm's internal process hasn't resolved it, FDRS (or the equivalent scheme the firm belongs to) is your next step. Free for the consumer.